Stagnation: the global nuclear industry

Countries with crisis-ridden nuclear programs or phase-out policies (e.g. Germany, Belgium, and Taiwan) account for about half of the world’s operable reactors and more than half of worldwide nuclear power generation

Lobbyists debate responses to the nuclear power crisis, Online opinion

By Jim Green – , 27 March 2017, Nuclear lobbyists are abandoning the tiresome rhetoric about a nuclear power ‘renaissance’. Indeed they’ve turned full-circle and are now warning about a crisis. Michael Shellenberger from the Breakthrough Institute, a US-based pro-nuclear lobby group, has recently written articles about nuclear power’s “rapidly accelerating crisis” and the “crisis that threatens the death of nuclear energy in the West“.A recent articlefrom the Breakthrough Institute and the like-minded Third Way lobby group discusses “the crisis that the nuclear industry is presently facing in developed countries” and states that “the industry is on life support in the United States and other developed economies”.

‘Environmental Progress’, another US pro-nuclear lobby group connected to Shellenberger, also acknowledges a nuclear power crisis. The lobby group notes that 151 gigawatts (GW) of worldwide nuclear power capacity (38% of the total) could be lost by 2030 (compared to 33 GW of retirements over the past decade).

As a worldwide generalisation, nuclear power can’t be said to be in crisis. To take the extreme example, China’s nuclear power program isn’t in crisis â€’ it is moving ahead at pace. Nuclear power is moving ahead at snail’s pace in some other countries (e.g. Russia, South Korea), while in others the industry faces problems but is not in crisis (e.g. UK, Sweden, Switzerland, Belgium, Ukraine).

The International Energy Agency report notes that record deployment of 153 GW of renewable energy capacity in 2015 was accompanied by “continued sharp generation cost reductions”, with further cost reductions of 15% for onshore wind and 25% for utility-scale solar PV anticipated over the next five years. Conversely, the Hinkley Point project in the UK typifies nuclear power’s astonishing cost increases â€’ the estimated cost (including finance) is A$40 billion for two reactors.

The US nuclear industry is in crisis, with a very old reactor fleet â€’ 44 of its 99 reactors have been operating for 40 years or more – and no likelihood of new reactors for the foreseeable future other than four already under construction.

Japanese conglomerate Toshiba and its US-based nuclear subsidiary Westinghouse are in crisis because of massive cost overruns building four AP1000 reactors in the US â€’ the combined cost overruns amount to about US$11.2bn and counting.

Toshiba said in February 2017 that it expects to book a US$6.3bn writedown on Westinghouse, on top of a US$2.3bn writedown in April 2016. The losses exceed the US$5.4bn Toshiba paid when it bought a majority stake in Westinghouse in 2006.

Toshiba is seeking legal advice as to whether Westinghouse should file for Chapter 11 bankruptcy. But even under a Chapter 11 filing, Reuters reported, “Toshiba could still be on the hook for up to $7 billion in contingent liabilities as it has guaranteed Westinghouse’s contractual commitments” for the US AP1000 reactors.

Pro-nuclear commentator Dan Yurman says that a “sense of panic is emerging globally” as Toshiba exits the reactor construction industry. He adds:

After nine years of writing about the global nuclear industry, these developments make for an unusually grim outlook. It’s a very big rock hitting the pond. Toshiba’s self-inflicted wounds will result in long lasting challenges to the future of the global nuclear energy industry.

The French nuclear industry is in crisis

The French nuclear industry is in its “worst situation ever“, former EDF director Gérard Magnin said in November 2016. The French government is selling assets so it can prop up its heavily indebted nuclear utilities Areva and EDF.

The current taxpayer-funded rescue of the nuclear power industry may cost the French state as much as €10bn, Reuters reported in January, and in addition to its “dire financial state, Areva is beset by technical, regulatory and legal problems.”

France has 58 operable reactors and just one under construction. French EPR reactors under construction in France and Finland are three times over budget â€’ the combined cost overruns for the two reactors amount to about €12.7bn.

Bloomberg noted in April 2015 that Areva’s EPR export ambitions are “in tatters“. Now Areva itself is in tatters and is in the process of a government-led restructure and another taxpayer-funded bailout.

On March 1, Areva posted a €665m net loss for 2016. Losses in the preceding five years exceeded €10bn. A large majority of a €5bn recapitalisation of Areva scheduled for June 2017 will come from French taxpayers.

On February 14, EDF released its financial figures for 2016: earnings fell 6.7%, revenue declined 5.1%, net income excluding non-recurring items fell 15%, and EDF’s debt remained steady at €37.4bn. All that EDF chief executive Jean-Bernard Levy could offer was the hope that EDF would “hit the bottom of the cycle” in 2017 and rebound next year.

On March 8, shares in EDF hit an all-time lowa day after the €4bn capital raising was launched; the stock price fell to €7.78, less than one-tenth of the €86.45 high a decade ago.

Costs of between €50bn and €100bn will need to be spent by 2030 to meet new safety requirements for reactors in France and to extend their operating lives beyond 40 years.

EDF has set aside €23bn to cover reactor decommissioning and waste management costs in France â€’ less than half of the €54bn that EDF estimates will be required. A recent report by the French National Assembly’s Commission for Sustainable Development and Regional Development concluded that there is “obvious under-provisioning” and that decommissioning and waste management will likely take longer, be more challenging and cost much more than EDF anticipates.

In 2015, concerns about the integrity of some EPR pressure vessels were revealed, prompting investigations that are still ongoing. Last year, the scandal was magnified when the French Nuclear Safety Authority (ASN) announced that Areva had informed it of “irregularities in components produced at its Creusot Forge plant.” The problems concern documents attesting to the quality of parts manufactured at the site. At least 400 of the 10,000 quality documents reviewed by Areva contained anomalies.

EDF is being forced to take over parts of its struggling sibling Areva’s operations – a fate you wouldn’t wish on your worst enemy. And just when it seemed that things couldn’t get any worse for EDF, a fire took hold in the turbine room of one of the Flamanville reactors on February 9 and the reactor will likely be offline until late March at an estimated cost of roughly €1.2m per day.

Half of the world’s nuclear industry is in crisis and/or shutting down

No-one would dispute that Japan’s nuclear power industry is in crisis, with no end in sight. Six years after the Fukushima disaster, only three reactors are operating in Japan; before the disaster, the number topped 50.

A February 2017 EnergyPostWeeklyarticle says “the EU, the US and Japan are busy committing nuclear suicide.”

Combined, the crisis-ridden US, French and Japanese nuclear industries account for 45% of the world’s ‘operable’ nuclear reactors according to the World Nuclear Association’s database, and they accounted for 50% of nuclear power generation in 2015 (and 57% in 2010).

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